Online used car aggregators see brisk business as demand outstrips supply

Olx says demand is 112 per cent of pre-Covid phase; Firms confident of demand sustenance beyond festivals

Strong interest from buyers of pre-owned vehicles has created a demand-supply mismatch in the used car market, a segment that has been of the biggest beneficiaries of the personal mobility trend.

As much as the economic uncertainties spawned by the pandemic are prompting buyers to opt for used instead of a new one, there is also a propensity among the existing owners to defer purchase of a new car and hold on to the existing one. Amid salary cuts and job losses, there are also those who are resorting to distress sales, this to some extent is making up for supply constraints.

Gajendra Jangid, co-founder and CMO at Cars24, says the online pre-owned vehicle platform based on proprietor auction model, has seen the number of people who are looking to sell off their cars increase two times from what it was before the pandemic. This to some extent has made up for the supply constraints but still the demand is far ahead of supplies. The brisk demand has jacked up the prices by 5 per cent in September over the same period last year, he said.

 

Cars24 saw its September sales increase 10 per cent from the pre-Covid levels. “The overall traffic/number of hits on our website has seen a four times jump to 12 million,” says he. People are shunning public transport and looking to own a car for reasons of safety and hygiene, points Jangid and given the current scenario pre-owned cars offer a good option, he added. “There is a fundamental shift and cars no longer being looked at as a status symbol but as a need,” he adds.

Others are also seeing strong traction. Amit Kumar, head Olx Autos India, says the online classified has seen the demand surge ahead 133 per cent of what it was during the pre-Covid phase. Supplies too have improved leaping 112 per cent of the pre-Covid phase. “The increase in supply is an indication of higher number of people wanting to sell off their cars for a combination of reasons including purchase of new cars and selling it due to financial distress,” said Kumar.

Niraj Singh founder and CEO, Spinny, a full-stack online used car platform says, “The platform has observed a 19 per cent increase in demand since May.” Of these, cars in the Rs.300,000 – Rs. 500,000 price range contributes to about half of the overall demand. Over the past 9 months, his firm has witnessed a 4x growth and since inception, he added.

 

A recent survey done by Olx suggest close to 60 per cent of buyers who are looking to buy a car in the next three to six months are likely to settle in for a used car.  Seven out of ten transactions, he pointed out, is taking place in the compact car segment as buyers are a lot more value conscious now.

All the firms cited above are confident of the demand sustenance beyond the festive season.  Cars24’s Jangid believes, there is a lot more to the current momentum than just the so-called pent up demand. He expects his firm to end the current year with a 30-40 per cent year-on-year growth, almost double the pace of the overall organized used car market. India sold 4 million to 5 million used cars last year ad is expected to see it grow by 10-15 per cent this year, he said.